NearbyNow Building Incredible Value

For all the hoopla that Shop.org and Forrester and comScore make about e-commerce and its growth, which I agree is impressive on a percentage basis, it’s never ever going to be the dominant use case. Repeat that: e-commerce is never going to be the dominant shopping use case.

When you include Travel, e-commerce is projected to exceed $200 billion this year. Admittedly that’s a huge chunk of money and why there are so many shopping sites now out there — all vying for a piece of that pie.

But in the context of the $4 trillion + overall US retail economy, one realizes that e-commerce in very small. Yet, as the most recent Yahoo!-CEA research suggests – even in a “commodity” category like electronics — people will research online and fundamentally want to buy in a store. So who’s trying to address that use case?

Readers of this blog and those with a local orientation may “grok” the power of what NearbyNow is doing. (Here’s my original post on the company.)

NearbyNow is building out real-time retailer inventory (almost 100% coverage) on local mall sites. The company has relationships with the two largest mall owners in the US and will roll out to 20 US cities over the next nine months. The company is also launching a wireless product next quarter. (I got a sense of that from CEO Scott Dunlap and it will be something to watch.)The company is also launching in-mall kiosks.

So what does this all mean on a practical basis?

It means that I can go to the mall site and conduct a search for “Hello Kitty” or “Gift Baskets” or “Backpacks” and find out if those items are in stock at the mall, the prices and which stores sell them. I can also “reserve” products for in-store pickup.

The number one reason people shop online is NOT price, it’s convenience. The “reserve” feature defeats the convenience of e-commerce except for shipping to a distant location. But Nearby now (at the product level) also links to the identical product on the retailer’s e-commerce site so that product can be purchased online and shipped to Aunt Gladys in Michigan. (NearbyNow becomes an affiliate in that situation.)

Scott Dunlap also told me that local retailers will refer people to the e-commerce stores in circumstances where it turns out that an item isn’t actually in stock. He says that consumers have responded very positively to this.

I could go on at length about in-mall promotions at the kiosks and the advertising opportunities that NearbyNow is building around product inventory search. Apparently the retailers are starting to understand the power of this, as are the shopping engines and portals. Dunlap says that he’s been getting tons of calls from people who want his data.

This is the very data that people at my final Kelsey show said would take 10 years to compile. It now appears, through NearbyNow’s efforts and others’, that it’s going to take about two.

Back in 1998 and 1999 people were arguing that e-commerce was eventually going to pose a major threat to traditional shopping in local stores. About seven years later the picture is quite different.

The better local inventory information gets and the more widely distributed online, the more e-commerce will start to look like not much more than a niche play.

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This entry was posted on October 27, 2006 at 12:45 pm and is filed under E-commerce, Local Search, Shopping. You can follow any responses to this entry through the RSS 2.0 feed.
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5 Responses to “NearbyNow Building Incredible Value”

[…] Froogle may survive as a vertical, but with more “one box” data on products being funneled directly into Google search results. Map view (described in the various posts) is about local inventory information. This will soon be a critical component of any shopping engine that wants to be really competitive. See my post on NearbyNow. Re Google/Froogle, see: eWeek, Garrett Rogers, Brian Smith’s Comparison Engines. […]

[…] Greg Sterling details why e-commerce will remain a niche in his discussion of US local-shopping search NearbyNow. Also, on the same day, AskTheLocal! was featured on the Financial Times site (Subscription Only). […]